I’m a resident and citizen of Australia and an NRI. I’m seeking to promote some land in India. Are there any exemptions which we are able to avail to attenuate taxes? I perceive that one can reinvest the capital positive aspects into property and that, too, abroad. Appreciate in the event you may kindly present any particulars, notably whether or not we are able to spend money on property in Australia. Are you conversant in the DTAA with Australia and any corresponding native LTCG relevant and standards? If we now have bought the property ( land) previous to 2001, what indexation and property worth can we think about for the aim of calculating the LTCG?
—Name withheld on request
Assuming that the asset is just not agricultural land, the sale of any immovable property in India will probably be taxable within the yr of sale. Any immovable property (being land or constructing, or each) held for a interval of greater than 24 months is classed as long-term capital asset. Long-term capital acquire (LTCG) is taxable at 20% (plus relevant surcharge and well being and schooling cess).
LTCG could also be claimed as exempt if the sale proceeds much less expenditure are invested in a single residential home in India (to be both bought inside one yr earlier than or two years after or constructed inside three years from the date of switch). This exemption is on the market if you don’t personal multiple residential home, aside from the brand new residential home in India, on the date of switch. Also, for the exemption to proceed, the brand new home that has been bought or constructed can’t be transferred inside a interval of three years.
Exemption is just not accessible if the funding is made exterior India. If the land was acquired previous to 1 April 2001, the associated fee may be substituted with honest market worth (however not exceeding the stamp obligation worth on 1 April 2001) if such honest market worth is greater than authentic price. The price of enchancment i.e., capital expenditure incurred for making additions or alterations to the property incurred after 1 April 2001 may also be thought of in capital positive aspects computation
As you’re a citizen of Australia, the LTCG on sale of land in India may additionally be taxable in Australia, as per home tax legal guidelines therein. In such case, you could declare international tax credit score in Australia for taxes paid in India in opposition to doubly taxed earnings as per the applying provisions of the Double Taxation Avoidance Agreement between India and the Australia.
Sonu Iyer is tax accomplice and folks advisory companies chief, EY India.
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